Commercial Insurance Vs. P&C Insurance

On a fundamental level, insurance is essentially an agreement between a person or business and an insurer that outlines an arrangement that the insurer will pay the insured party a sum of money if a particular event happens in the future. In return for this agreement, the insured party pays regular payments, known as premiums, to the insurer – even if the event never happens.

The purpose of insurance is to reduce risk to a person or businesses due to unforeseen events. Because of the many risks of everyday life and business operations, there are many different types of insurance one can choose from.

When shopping for insurance, it is essential to know just what you are looking to insure and the proper terminology that goes along with it. Without that knowledge, one runs the risk of purchasing the wrong policy or one that is not relevant to the situation.

For example, commercial insurance and property and casualty (P&C) insurance both overlapping coverages but are distinctly different from each other.

What Is Commercial Insurance?

Commercial insurance refers to the type of insurance that is purchased by businesses and corporations to protect the business and its owners, employees and assets.

A key property of commercial insurance is that it refers to the type of entities that are insured, but not quite the insurance policy itself. Because the different types of businesses vary so widely, there is no one-plan-fits-all when it comes to commercial insurance.

Factors that determine what kind of insurance a business needs include its location, number of employees, type of operations and assets owned.

Property and Casualty Insurance

Property and casualty insurance is a broad umbrella of different types of coverages and policies. Commercial property and casualty insurance is used to specify policies specifically for businesses. In regards to the property portion of P&C insurance, it provides coverage for damaged or stolen property; things like theft, vandalism, fire and weather are covered under such policies.

A professional with a P&C insurance license should be able to assist businesses in understanding the specifics of each type.

The casualty portion of P&C insurance is also referred to as third-party insurance because it is purchased by a person or company to protect themselves against claims from third-party individuals. In the event that something happens that the insured entity is legally liable for – such as injuries caused, property damage or any other negligible act – this type of insurance will cover it.

Types of P&C Insurance Policies

Common types of P&C insurance policies include car insurance, homeowners' insurance, renters insurance and specialty insurance. Car insurance is generally required to legally drive throughout the country and is the most common type of P&C insurance policy.

Homeowners' and condo insurance can go hand in hand as they both cover the interior structures of the residence; however, homeowners' insurance will typically cover any exterior damages, as well as property that was inside of the residence.

Specialty insurance can be purchased for items considered "unique," such as motorcycles, boats and RVs.

Combinations of Policies

For most businesses, both property and casualty insurance is often required. In addition to needing property insurance for the protection of the physical location itself, it is often important to have casualty insurance to have protection in case of mishaps that may occur while performing business operations.

Even if the business itself wants to forego particular types of insurance to cut down on costs, many regulations and stakeholders will require they have it.

For convenience purposes, P&C insurance companies will often offer package-based insurance bundles.